Tag Archive for Taxable Income

What You Need to Know about Taxable and Non-Taxable Income

David Green

All income is taxable unless a law specifically says it isn’t. Here are some basic rules you should know to help you file an accurate tax return:

Taxable income. Taxable income includes money you earn, like wages and tips. It also includes bartering, an exchange of property or services. The fair market value of property or services received is normally taxable…. Read more

Are Legal Expenses Tax Deductible?

Barry Fowler40

A frequent question that arises is whether legal expenses are deductible. The answer to that question can be both yes and no and can be complicated depending upon the nature of the legal expense.

The Internal Revenue Code (IRC), which is the body of tax laws written by the United States (U.S.) Congress and approved by the president in office at the time the law is created, tells us that except as otherwise expressly provided, such as itemized deductions, no deduction shall be allowed for personal, living, or family expenses. The IRC also says that, in the case of an individual, deductions are allowed for all of the ordinary and necessary expenses paid or incurred during the taxable year:

For the production or collection of taxable income; Read more

Are Lower Income Taxpayers Taking Full Advantage Of The Earned Income Credit?

Milton Boothe-9-24-15

The earned income credit (EIC) is a major tax credit that is specifically designed for lower income working families and individuals. The amount of the credit varies depending on your level of income and how many dependents you support. You can claim this credit with or without qualifying children, but greater tax credit is given to those who have qualifying children. This credit can be valued at over $6,000 if you have three or more qualifying children. The earned income credit is a refundable credit, which means that you will receive a tax refund whether or not you had any taxable income.

As the name implies, the earned income credit is provided as an incentive for individuals to work. Consequently, to qualify for this credit, you must have some form of earned income during the year. Earned income includes wages you get from working, and Read more

Your Personal And Dependent Exemptions

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Claiming your eligible exemptions is very important, because exemptions directly reduce your taxable income. You are entitled to one personal exemption for yourself, one for your spouse (if filing a joint return), and one exemption for each dependent that you claim on your tax return. Knowing the criteria and requirements for claiming these exemptions will facilitate the preparation of your individual income tax return, and will ensure that you do not miss out on important tax benefits.

Exemptions are fixed amounts, calculated on a per person basis, and they reduce the amount of your income that is subject to income tax.
The exemption amounts are generally increased year by year, as adjusted for inflation, and the amount for tax year 2014 is $3,950 ($4,000 for tax year 2015). Each person for Read more

You Could Be A Big Loser If You Don’t Itemize All Your Expenses

3d business white people. Businessman with calculator.

The government affords all taxpayers a standard deduction from their incomes. This deduction naturally decreases your taxable income, and the amount you are entitled to, is based on your filing status. However, if your total eligible deductible expenses exceed the standard deduction amount, you may be allowed to itemize your deductions. Also, you must itemize if you do not qualify for the standard deduction. Itemized deductions are comprised of certain eligible expenses that individual taxpayers in the United States can report on their federal income tax returns in order to decrease their taxable income. Most taxpayers are allowed a choice between the itemized deductions and the standard deduction.

To claim your itemized deductions, you must complete Schedule A, Itemized Deductions. Read more